Marketing to the Bottom of the Pyramid
The Bottom of the Pyramid (BOP) refers to the billions of people who survive on less than $2.00 a day. This group accounts for approximately three quarters of the world population. The BOP has been ignored by many companies as their combined purchasing power is usually overlooked. Many successful multinational firms like Wal-Mart and Sears have been able to create a fortune by catering to the lower income market. Thus, if companies tailor their products to the economic realities and needs of this income bracket, a considerable profit can be attained. The key is not making ‘cheap stuff’ to this market segment but making technologically advanced products affordable and suitable. For example, an individual in the BOP may not need all the extensive features of a Blackberry Storm cell phone which sells for approximately $900.00 but rather the basic features of a simple Motorola that is sold for $20.00.
Several factors need to be taken into account when developing a strategy to market a company’s product to the Bottom of the Pyramid. The two most important factors are the need of the product by the BOP and the ability to effectively adapt the product to suit them. Information pertaining to income levels also serves as a guide in pricing the product so that it is economical to potential consumers. The company also needsto pay close attention to the most effective way of distributing its product to these consumers; where do they shop? What places do they frequent? What is the best form of communication? It is critical that the consumers know about the product and that it easily accessible.
Can making loans to customers whose income is less than $100 monthly at interest rates of 20% to purchase TVs, cell phones and other consumer durables be justified?
I think that such a high interest rate serves to dissuade low income consumers from purchasing products which are not generally considered necessities. Also, because of...